Ethereum Foundation: Reshaping the relationship between L1 and L2 to create a unified on-chain economy

Written by: Josh Rudolf , Julian Ma, and Josh Stark, Ethereum Foundation

Compiled by: Chopper, Foresight News

The ultimate goal of the Ethereum Foundation's Platform team is to drive Ethereum's scalability as a unified and collaborative system, ensuring its reliable use by all users. This article aims to share our perspective on the relationship between L1 and L2, explaining the role of each layer and how we (as an ecosystem) can leverage the strengths of both L1 and L2 to create the most attractive platform for all users. Some of this is already clear, while others require continued experimentation and iteration with the community and users to validate.

TL;DR

Objective: All individual and institutional users should have clear pathways to leverage, extend, and benefit from the core properties offered by Ethereum. The best way to achieve this is to fully utilize the unique capabilities of each layer, strengthen Ethereum's core properties, and unlock meaningful value for end users through these properties.

As the Ethereum ecosystem has developed, the role of each layer has also evolved:

• In the past, L2's primary mission was to facilitate Ethereum's scaling, followed by providing space for differentiation and customization. Among these, scalability was the key.
• Today, L2's primary mission is to achieve scalability while providing differentiated features, services, customized solutions, marketing strategies, and controlled territories. Currently, the biggest drivers are differentiation, control, and innovation.
• L1 serves as a truly permissionless and highly resilient global hub for settlement, shared state, liquidity, and DeFi. A robust, scalable L1 layer that does not compromise CROPS (censorship resistance, open source, privacy, and security) provides a better foundation for L2.
• L2 provides valuable new features, customizations, and control to grow its own on-chain economy while extending Ethereum's core attributes to more users. A robust L2 network strengthens the Ethereum ecosystem and its core focus.

L2 covers all aspects and establishes differentiated binding relationships with L1 based on its own needs:

• Those L2s seeking the tightest integration with L1 should strive to achieve mechanisms such as synchronous composability, full interoperability, shared liquidity, and native rollups.
• L2s with diverse business models or technological expertise will continue to play a vital role in the ecosystem, providing exclusive capabilities that L1s cannot cover.

The Ethereum Foundation (EF) will continue to develop underlying technologies to help L2 seamlessly extend the native features of L1, securely enabling cross-layer and cross-chain liquidity and asset interoperability; at the same time, it requires L2 to be open and transparent, clearly disclosing its security attributes and verification standards. In short, both sides play important roles, and their words and actions must match.

introduction

Over the past five years, a vast L2 ecosystem has emerged around Ethereum's L1 platform. Various L2 chains inherit different native characteristics of Ethereum: some fully replicate the decentralized architecture (such as Stage 2 Rollups), some inherit some security features (such as Validium and Prividium), and some are only compatible with the general EVM standard (not L2). Many chains are still under development, typically starting as independent chains and gradually integrating deeply into the Ethereum L1 ecosystem.

It's time for the Ethereum Foundation (EF) and the wider Ethereum ecosystem to update our understanding of the relationship between L1 and L2 networks. The last update was arguably five years ago, when a rollup-centric roadmap was first proposed as a way to scale Ethereum.

Since then, things have changed dramatically. The technology enabling L2 layers to share Ethereum's security and liquidity and interoperate with it has matured; L2's differentiated competitiveness and user value have become increasingly prominent; L2 itself has grown and developed, fostering an independent community ecosystem; and the L1 layer's scaling roadmap has also evolved and become clearer. The Ethereum ecosystem needs to face these changes squarely and learn from past successes and failures.

Over the past few months, the future direction of the relationship between Ethereum L1 and L2 has gradually become clearer:

• A thriving Ethereum ecosystem must be built on a strong L1 foundation.
• Ethereum L1 will achieve orders-of-magnitude scaling while maintaining the highest levels of security and decentralization, continuing to serve as the core of the on-chain economy and the center of DeFi.
• The future will see an ecosystem of independent and interoperable Level 2 chains, offering a level of customization, control, and functionality unavailable on Level 1 chains. These Level 2 chains choose to establish themselves within the Ethereum ecosystem because it is the best option for their users, communities, or businesses.
• L2 chains both compete and cooperate to provide a wide variety of specialized blockchain spaces, services, and assets.

This article aims to explain the vision of L1 and L2 symbiosis in more detail and to chart a path for a mutually beneficial relationship between Ethereum L1 and any chain that wants to take root and become part of the ecosystem.

What roles do L1 and L2 play respectively, and how do they work together?

Ethereum L1 is a world-leading programmable blockchain. In terms of user adoption, developer ecosystem, decentralization, resilience, and underlying stability, no other blockchain currently rivals it. Ethereum L1 is the core of the DeFi ecosystem, aggregating the deepest liquidity across the entire network.

Ethereum L1 now has a clear scaling path while maintaining decentralization and security. Thanks to the collaborative efforts of numerous teams within the Ethereum ecosystem, the development of zero-knowledge proof (ZK) technology has far exceeded expectations. In the coming years, we will be able to increase the capacity of Ethereum L1 by several orders of magnitude while upholding its core value vision.

At the same time, no single public blockchain can support the diverse on-chain economic needs of the world. Even if Ethereum maintains its leading position and its scalability increases by 1000 times, many different chains will still exist because they offer specialized and customized services that even L1 blockchains cannot provide.

• Specialization for specific applications or use cases
• Non-EVM functions
• Additional privacy protection
• Pricing mechanisms or transactions contain logic
• Ultra-low latency or other sorting features
• The extreme scalability of L1 cannot be matched
• Specialized economies, market entry strategies and growth models
• Modular design to meet compliance or other business needs
• Other improvements or innovations can iterate and deliver faster than L1.
• ...

This provides an opportunity for L1 and L2 to establish a mutually beneficial relationship, where each can focus on its complementary role.

Why are other independent public blockchains willing to become Ethereum's L2?

• Low cost. Compared to independent underlying public chains, L2 replicates Ethereum's top-tier security and decentralization with an extremely low barrier to entry; building a global decentralized verification node is costly, time-consuming, and extremely difficult. L2 can transfer this responsibility to Ethereum L1, paying only as needed and without incurring high fixed construction costs.
• Users and developers can reach more users and developers through interoperability with the largest L1 and L2 clusters on the network. Due to the maturity of zero-knowledge proof technology, real-time proofs, faster L1 finality and L2 settlement, as well as proxy infrastructure, interoperability and cross-chain user experience will accelerate.
• Interoperability. If designed properly, L2 can securely access L1 assets and DeFi liquidity, user accounts on L1, and any services on L1, such as oracles and ENS.
• Marketing: As part of the Ethereum ecosystem, you can gain advantages in terms of brand and reputation, which boasts the best reputation, security track record, and regulatory approval among all L1 blockchains.

What can Ethereum L1 gain from this? Based on our experience and discussions with stakeholders across the ecosystem, we believe that positioning Ethereum L1 at the core of the growing L2 network can strengthen Ethereum and ETH's unique position in the on-chain economy:

• It creates demand for ETH and provides a trust-minimized, secure bridging service between ETH and other assets. ETH simultaneously functions as a store of value and a currency within the Ethereum network.
• Expanding Ethereum's network effects (e.g., EVM, developer education, developer tools, user onboarding, and interoperability between L2 layers).
• Strengthening Ethereum's important position as the core of the multi-chain ecosystem and the main settlement and liquidity layer for on-chain economics.
• Provide broader business development, growth, and marketing support for Ethereum.
• L2 databases help realize the core vision of the Ethereum ecosystem. As the distributed engine of Ethereum's core attributes (security, resilience, and stability), they maximize the number of users who derive sustainable value from Ethereum.

The Ethereum ecosystem should not take these advantages for granted. Some of these advantages remain controversial within the community or are long-standing theories that require experimentation, measurement, and analysis to validate. Ultimately, the relationship between L1 and L2 must be mutually beneficial to succeed. This relationship has achieved much over the past five years and laid a crucial foundation for the future.

What does this mean for the future development of L2?

What does this new vision mean for Level 2 users, their teams, and their communities?

Here are our suggestions:

• L2 should focus on strategies that complement L1 and differentiate the platform. Many L2s have successfully moved towards this vision. They have achieved this through innovative features, targeting specific use cases (such as application chains), providing new distribution methods, or adopting novel marketing strategies. This has helped them create their own unique communities and extend Ethereum's features to millions of new users.
• L2 should have the right to differentiate itself in various ways, according to its own imagination. We have already seen differentiation emerge in areas such as scalability, trustlessness, privacy protection, enterprise compliance, industry sectors, community, and a range of technological innovations.
• L2 platforms can choose to extend all or some of Ethereum's properties based on their own goals. However, they should ensure that users can easily understand the security properties they provide and do not provide. An L2 platform committed to minimizing trust should at least reach Stage 1 and pass the "exit" test, meaning that even in the event of malicious actors or security committee negligence, users can safely exit to L1. L2 platforms that choose to be closest to L1 and fully inherit its properties should move in these directions: 1) Reach Stage 2; 2) Synchronize composability; 3) Become a native Rollup.
• L2 should continue to work on building broader interoperability and shared liquidity mechanisms to enhance the entire Ethereum ecosystem.
• L2 should continue to operate in a transparent manner, clearly explaining to the ecosystem its respective security attributes and its relationship with the L1 security layer.

What contributions is the Ethereum Foundation making to building such a world?

To realize the vision of L1<>L2 relationship, the Ethereum Foundation is fully committed to the following work:

• We are committed to expanding both the L1 layer and the blob without sacrificing decentralization. Currently, the blob fill rate is only around 30%, leaving huge room for expansion. If needed, we can confidently expand the blob further.
• Special support is given to those who have or wish to deepen their L2 licenses in areas such as privacy, security, and trustlessness.
• The Platform team, led by Josh Rudolf, aims to improve the overall performance of the Ethereum platform and serve as an interface between L2 and the core protocol roadmap.
• Improve the liquidity of L1 to make it easier for L2 to obtain liquidity (faster final confirmation, withdrawals and deposits).
• We work closely with the L2 team to understand their needs and incorporate them into protocol priorities, while clarifying the relationship between L1 and L2. To ensure this relationship functions effectively, we need to understand what works and what needs improvement, and collaborate accordingly. Our goal remains to define and strengthen our value proposition as part of the Ethereum ecosystem.
• We are investing in research and development to achieve "native Rollup" technology, which is an L2 chain that can be fully and trustlessly verified by L1, thereby achieving synchronous composability and secure interoperability.
• We work closely with L2Beat and other organizations to monitor and validate the security features of L2. We must rigorously and honestly evaluate the features of L2 and their relevance to L1 security so that users and developers can make informed choices.
• Addressing a major drawback of multi-chain ecosystems: fragmentation. We will collaborate with the ecosystem—including chains, wallets, and infrastructure providers—to build more robust interoperability solutions to address fragmentation in user experience and developer platforms. Now, with a clearer understanding of the relationship between L1 and L2, we can begin to address the fragmentation of the Ethereum narrative.

Together, we will build a global, permissionless on-chain economy and provide the best platform for all users.